Peter Schiff: What’s Next for Trump?

In the latest episode of the Peter Schiff Show, Peter dissects Donald Trump’s dominant election victory and spends most of the show evaluating America’s economic prospects under his second term. He also hits on Bitcoin’s recent price surge and announces a new lawsuit launched against the IRS and other parties responsible for the closing of Peter’s bank in Puerto Rico. 

Peter starts the episode by pointing out the obvious reason Trump won. Despite what the media and political class insists, it’s not bigotry or hatred:

“I want to remind my audience why he won and why I was so confident for so long that he was going to win. He won because the economy is lousy. That’s why he won the first time in 2016. That’s why I predicted he was going to win in 2016, because back in 2015, the media was selling the same BS—mainstream media, Wall Street—that we had a great economy. … Donald Trump was basically saying the same thing that I was. It was almost like he was watching my podcast and then going out and stomping on the campaign trail, talking about how the economy was actually bad, how the numbers were a fraud.” 

The state of the economy explains why Trump was able to assemble a coalition unlike any other in recent Republican history:

“He got 20% of the African American vote. I mean, it dwarfs what he got the first time—I think he got 88% white support and maybe 12% African American. Twenty percent! That’s the biggest percentage of the African American vote that Republicans have had in, I don’t know, 20 years. … The guy’s supposed to be a racist, and he’s getting more African American support than other Republicans who supposedly were racist. Why did he get all these African American votes? Because they’re suffering in this economy.”

Much of the Trump campaign’s rhetoric on deregulation is solid. Peter, however, urges caution on deregulating the financial sector. Unless banking subsidies and bailouts are taken off the table, further deregulation will just reward banks for bad fiscal behavior:

“In banking, it’s almost not really two wrongs make a right, but two wrongs make a lesser wrong. So once you make the mistake of providing all these subsidies and government guarantees to banks, then the government needs to step up and regulate them because you’ve now eliminated the free market regulation. So now what they’re going to do is deregulate the banks so they can take even bigger risks with taxpayer money.”

The GOP has a strong mandate to reform the federal government, and they should. But it’s unlikely they’ll actually make meaningful change:

“Politicians have been promising for years to cut waste, fraud, and abuse. They never do it. Yes, when Elon Musk bought Twitter, he made major cuts. He had the kitchen sink, and he got rid of a lot of dead wood. That’s because he owned the company. He could do what he wants. He’s not going to be able to do that with the government. The real spending cuts are going to have to get approved by Congress.”

Any more Trump tax cuts will put pressure on already rising long-term rates and likely induce the Fed to return to QE:

“The Fed is going to have to go back to QE, which is what I’ve been saying they’re going to do. The only way to stop long-term interest rates from soaring and crushing the economy, the stock market, the banks, and everything Trump is promising to pump up, is if the Fed goes back to quantitative easing to monetize the massive budget deficits that the tax cuts produce—at least in the short run.”

The worst case for Trump’s second term is a major financial crisis. If the economy blows up in the next four years, Trump will be blamed, and the left will benefit:

“If everything collapses right away, you know, see what Trump did, and they’re going to tie Trump to capitalism, free markets, deregulation, less government. So they’re going to really hang this collapse on free-market capitalism and Trump. And if you thought Kamala was left-wing, wait till you see who we elect in four years, you know, because of this collapse.”

One way to ameliorate America’s economic problems would be to slowly return to the gold standard. One former Trump administration advisor has recently issued such a plan.